Work out the monthly payment for financing business equipment. Enter the cost, down payment, rate and term, and add a balloon if your lender offers one. You'll see total interest, a year-by-year schedule and an estimate of your Section 179 first-year tax savings.
Last updated:
Equipment
$
$
Extra costs you are also financing.
%
$
Financing
%
months
% of cost
0 for a fully amortizing loan.
$
Section 179 estimate (US)
%
Must be over 50% to qualify.
%
Combined federal + state rate on business income.
$
$2,500,000 for 2025 under the 2025 tax law, adjusted for inflation in later years. Edit if needed.
Enter your values to see the result.
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How to use the Equipment Loan Calculator
Enter the equipment cost and any tax, delivery or setup costs you will finance.
Set the down payment and any trade-in value.
Enter the rate and term, and a balloon percentage if your loan has one.
Optionally estimate Section 179 savings with your business-use share and tax rate.
Review the payment, total interest and schedule, then copy or download the results.
How equipment loan payments are calculated
An equipment loan is a term loan secured by the equipment you buy: vehicles, machinery, computers, medical or restaurant gear. The amount financed is price − down payment − trade-in (+ any fees you roll in), and the monthly payment uses the standard amortization formula:
P = L × r ÷ (1 − (1 + r)−n), where r = APR ÷ 12 and n = number of months.
Some lenders offer a balloon (or residual) structure: part of the balance, B, is left to be paid in one lump sum at the end, which lowers the monthly payment. The payment is then P = (L − B ÷ (1 + r)n) × r ÷ (1 − (1 + r)−n). For example, $100,000 at 8.5% over 48 months with a $20,000 balloon costs about $2,113.53 a month instead of $2,464.83.
Monthly payments at 8.5% APR
Amount financed
36 months
60 months
84 months
$25,000
$789.19
$512.91
$395.91
$50,000
$1,578.38
$1,025.83
$791.82
$100,000
$3,156.75
$2,051.65
$1,583.65
$250,000
$7,891.88
$5,129.13
$3,959.12
Section 179 and financed equipment
Under US Section 179, a business can usually deduct the full cost of qualifying equipment in the year it is placed in service, even when the purchase is financed. So the first-year tax savings can be larger than the payments you make that year. Key points:
For tax years beginning in 2025 the deduction limit is $2,500,000. It starts to phase out dollar for dollar once total qualifying purchases exceed $4,000,000. Both amounts are indexed for inflation in later years.
The equipment must be used more than 50% for business, and only the business-use share counts.
The deduction cannot exceed your taxable business income for the year. Any excess carries forward.
Heavy SUVs have a lower separate cap, and bonus depreciation is another option for amounts above the limit.
The savings shown are a simple estimate (deduction × your marginal tax rate). They are not tax advice. Check the current limits and your situation with a tax professional.
Frequently asked questions
How do I calculate an equipment loan payment?
Subtract the down payment and trade-in from the price to get the loan amount L, then use P = L × r ÷ (1 − (1 + r)^−n), with r = APR ÷ 12 and n = months. $76,500 financed at 8.5% for 60 months is about $1,570 a month.
What is a balloon payment on an equipment loan?
A balloon leaves part of the balance to be paid in one lump sum at the end of the term. It lowers the monthly payment, but you pay more interest overall and need cash or refinancing for the final payment.
How much down payment do equipment loans need?
Many lenders finance 80% to 100% of the equipment cost. Strong credit and established businesses may put nothing down, while newer businesses or used and specialized equipment often need 10% to 20%.
Can I take Section 179 on financed equipment?
Yes. Section 179 lets you deduct qualifying equipment in the year you place it in service, whether you paid cash or financed it. The deduction is limited by the annual cap and your business income, and the equipment must be used more than 50% for business.
What is the Section 179 limit?
For tax years beginning in 2025 the limit is $2,500,000, phasing out once qualifying purchases exceed $4,000,000. These amounts are indexed for inflation in later years, so the limit field in the calculator is editable.
How long are equipment loan terms?
Terms usually match the useful life of the equipment: often 2 to 5 years for computers and light equipment, and up to 7 to 10 years for heavy machinery and vehicles.
Is an equipment loan better than a lease?
A loan builds ownership and lets you take depreciation or Section 179. A lease may have lower payments and makes upgrades easier. Compare the total after-tax cost of both before you decide.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.